In W.P. (C) 1797/2021 -DEL HC- Delhi High Court overrules Designated Committee's decision to reject Kama Ayurveda’s application under Sabka Vishwas Scheme for non-quantification of Tax dues
Justice Vibhu Bakhru & Justice Amit Mahajan [19-05-2023]

Read Order: Kama Ayurveda Private Limited V. Union of India & Ors

Chahat Varma

New Delhi, July 3, 2023: The High Court of Delhi has provided relief to Kama Ayurveda Private Limited (petitioner) by ruling against the contention that tax dues can only be quantified upon the completion of an investigation and the issuance of a show cause notice. The court deemed this argument to be without merit and contrary to the provisions of Section 123(c) of the Finance Act and the Circular issued by CBIC dated 27.08.2019. As a result, the decision of the Designated Committee to reject the petitioner's application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019, on the grounds of non-quantification of tax dues, was rejected.

The petitioner in the present case had approached the Delhi High Court to challenge the decision of the Designated Committee that rejected their application under the Sabka Vishwas (Legacy Dispute Resolution) Scheme, 2019.

The division bench of Justice Vibhu Bakhru and Justice Amit Mahajan observed that in the present case, there was no dispute regarding the amount of central excise payable for the goods cleared from the Delhi Warehouse. The petitioner had acknowledged its liability from the outset and had voluntarily disclosed the same in its communications. However, the respondents had not accepted the payments made by the petitioner to discharge the liability, stating that the payments were made under a different code belonging to the petitioner's place of business in Coimbatore.

Further, the respondents had argued that the tax dues quantified by the petitioner in their communication should not be considered as quantified tax dues under the Scheme because the investigations were still ongoing until the issuance of the show cause notice on 09.08.2019. They contended that the tax dues could only be considered as quantified once the investigation was completed and an official communication quantifying the amount due was issued. However, the bench rejected these arguments, stating that the contentions raised by the respondents were not justified. According to the bench, tax dues quantified by the taxpayer in any communication would qualify as tax dues under the Scheme if there was no dispute regarding the same. It was also observed that the Scheme also covers cases where investigations, enquiries, and audits are still pending.

The bench referred to the case of Hans Uttam Finance Limited v. Principal Commissioner of Central Excise, Goods and Service Tax, Delhi South Commissionerate & Ors [LQ/DelHC/2023/2932], wherein it was observed that Clause (c) of Section 123 of the Finance Act (No. 2), 2019 covers situations where the matter has not yet reached a final determination, including cases where there is an ongoing enquiry, investigation, or audit.